Should You Pay The Ransom?

The recent surge in popularity of “ransom-ware”, along with Islamic State’s penchant for hostage-taking got me thinking about kidnapping & ransom.

In last weekend’s FT, Tim Harford reviewed the work of Reinhard Selten on the ‘Chain Store Paradox’ and it struck me that there was a strong parallel between the rational response of a monopoly chain-store owner to new entrants into the market, and the question of whether an individual should pay the ransom to a kidnapper.

As a parent (of two teenaged sons) I can of course appreciate that on a personal level, if anything happened to anyone in my family I would stop at nothing to get them back safely. Yet in doing so, I would in a small way be perpetuating the ‘business’ of kidnapping. Governments face the same dilemma and there has been much media coverage (e.g. this article in The Guardian) recently of the question as to whether some European governments are compromising US & UK’s harder stance on the issue by paying ransom to get their citizens back.

In Harford’s article he points out that Selten considered two possible extreme responses for the monopoly chain-store owner: either step aside, keep prices high and expect to lose some market share; or alternatively crush the upstart by dropping prices.

It seems to me that to have any chance at all of eradicating hostage-taking, destroying the economic model is the only way to do so. That means firstly governments agreeing not to pay ransom, ever. And perhaps it also means making the paying of ransom by individuals or corporates a criminal offence. This might seem extreme, but I think it’s probably the only way. It’s also pretty unlikely to come to pass unfortunately since even the permanent members of the UN Security Council don’t appear to be able to trust each other to keep their words on this matter.


This article first appeared on LinkedIn 23 September 2014